Section 80GG: Deduction for Rent Paid Without HRA
- PRITI SIRDESHMUKH
- Oct 14
- 8 min read
Section 80GG of the Income Tax Act, 1961 allows taxpayers who pay rent but do not receive House Rent Allowance (HRA) from their employer to claim a deduction, reducing their taxable income. Applicable to salaried employees without HRA and self-employed individuals, this deduction helps offset the financial burden of renting a home. To claim this benefit, taxpayers must satisfy certain conditions, maintain proper documentation, and file Form 10BA with their income tax return. Using platforms like TaxBuddy ensures accurate calculations and seamless filing, making it easier for individuals to maximize this deduction under the old tax regime.
Table of Contents
Who Can Claim Section 80GG Deduction?
Section 80GG is primarily intended for taxpayers who do not receive HRA. It benefits individuals, self-employed professionals, or salaried employees who pay rent for accommodation but are not entitled to HRA. To claim the deduction, the taxpayer must be paying rent for a residential property that they occupy as their residence. This makes Section 80GG particularly useful for entrepreneurs, freelancers, or employees living in rented homes without any HRA component in their salary structure.
Eligibility and Conditions for Claiming Section 80GG
To claim Section 80GG, the taxpayer must fulfill several conditions:
The taxpayer should not receive HRA from their employer.
They must pay rent for residential accommodation occupied by them.
The taxpayer, their spouse, or minor child should not own any residential property in the city where the taxpayer resides or works.
Rent paid should exceed the exempt amount under Section 80GG.
These conditions ensure that the benefit is claimed only by those genuinely paying rent and not already enjoying housing benefits through their employer or property ownership.
How to Claim Section 80GG Deduction
Taxpayers must declare the rent paid while filing their Income Tax Return (ITR). Additionally, a declaration in Form 10BA confirming that no HRA has been received and that the taxpayer meets the eligibility conditions must be submitted. The rent paid, minus any exempted portion, can then be claimed as a deduction under Section 80GG while calculating taxable income.
Deduction Limits Under Section 80GG
The deduction under Section 80GG is limited to the least of the following:
Rent paid minus 10% of total income (excluding capital gains).
₹5,000 per month.
25% of total income (excluding capital gains).
Taxpayers need to calculate these three amounts carefully and claim the lowest of the three as the deduction to ensure compliance with tax rules.
Is Section 80GG Allowed in the New Tax Regime?
Section 80GG is not allowed under the new tax regime. Taxpayers opting for the new tax regime cannot claim this deduction. Only those filing under the old tax regime can benefit from Section 80GG while reducing their taxable income.
Section 80GG for Salaried vs Self-Employed Individuals
Salaried Individuals: Salaried employees who do not receive HRA as part of their salary can claim Section 80GG. This is particularly useful for employees living in rented accommodations provided privately or outside the city of employment.
Self-Employed Individuals: Professionals and business owners paying rent can also claim Section 80GG. They must maintain proof of rent payments and submit the Form 10BA declaration with their ITR to claim the deduction.
Required Documents and Form 10BA Declaration
To claim Section 80GG, taxpayers need to maintain the following documents:
Rent receipts for the financial year.
Copy of the rental agreement.
Form 10BA declaration confirming that the taxpayer, spouse, or minor child does not own a house in the city of residence or employment and that HRA is not received.
Accurate documentation ensures that the deduction is accepted without scrutiny.
Tax Calculation Example Under Section 80GG
Suppose a taxpayer has a total income of ₹6,00,000 and pays ₹50,000 per year as rent:
Rent paid minus 10% of total income = ₹50,000 - ₹60,000 = Not eligible.
₹5,000 per month = ₹60,000.
25% of total income = ₹1,50,000.
The deduction under Section 80GG will be ₹50,000, which is the lowest of the three calculations. This reduces taxable income and lowers overall tax liability.
Special Considerations and Points to Remember
Taxpayers who wish to claim deductions under Section 80GG must ensure that they do not receive any house rent allowance (HRA) from their employer. This deduction is specifically designed for individuals who do not benefit from HRA as part of their salary structure. If HRA is being received, claiming Section 80GG is not allowed, as the exemption cannot be claimed simultaneously under both provisions.
It is essential to maintain accurate documentation to substantiate the claim. This includes rent receipts from the landlord and a valid rental agreement specifying the terms of rent, duration, and the parties involved. These documents serve as proof of actual rent paid and are required in case of scrutiny by the Income Tax Department.
The deduction under Section 80GG is subject to a maximum limit. Taxpayers must carefully calculate the eligible deduction, which is the least of the rent paid minus 10% of total income, 25% of total income, or the statutory limit of ₹5,000 per month. Accurate computation is crucial to ensure compliance and avoid discrepancies during assessment.
Section 80GG is applicable only under the old tax regime. Individuals filing under the new tax regime, which offers lower tax rates but restricts most exemptions, cannot claim this deduction. Therefore, it is important to choose the appropriate regime before planning tax deductions.
Additionally, the deduction cannot be claimed if the taxpayer owns a house in the city where they work or reside. Owning a property in the same city of employment implies that rent is not being incurred for residential purposes, and the deduction under Section 80GG is therefore ineligible.
Common Mistakes to Avoid While Claiming Section 80GG
Claiming Section 80GG while receiving HRA: One of the most common mistakes taxpayers make is attempting to claim Section 80GG when they are already receiving House Rent Allowance (HRA) from their employer. Section 80GG is specifically designed for individuals who do not receive HRA. If a taxpayer receives HRA, claiming 80GG is not permitted, and doing so can lead to rejection of the deduction during processing. Taxpayers should carefully verify their salary structure and HRA benefits before applying for this deduction.
Failing to submit Form 10BA: Another frequent error is not submitting Form 10BA to the Income Tax Department. Form 10BA serves as a declaration that the taxpayer does not receive HRA and is paying rent for accommodation. Without this form, the deduction claim under Section 80GG may not be accepted, leading to discrepancies or delays in the processing of returns.
Miscalculating the deduction amount: Section 80GG allows a deduction limited to the least of specified amounts, including actual rent paid minus 10% of total income, ₹60,000 per year, or 25% of total income. Many taxpayers miscalculate this amount, either claiming more than the allowed limit or applying incorrect formulas, which can lead to notices from the tax department or adjustments during assessment.
Not maintaining rent receipts or rental agreements: Proper documentation is crucial while claiming Section 80GG. Taxpayers must maintain valid rent receipts, including details such as the landlord’s name, address, PAN (if applicable), and the rent amount paid. Additionally, rental agreements should be kept safely, as the Income Tax Department may request these documents for verification. Failure to maintain proper records can result in deduction denial or scrutiny.
Claiming under the new tax regime: Section 80GG is not applicable under the new tax regime. Taxpayers opting for the new regime should not claim deductions under Section 80GG. Attempting to do so may cause errors in ITR filing and trigger processing issues, as the deduction is only recognized under the old tax regime.
By avoiding these mistakes, taxpayers can ensure smooth processing of their income tax returns and secure approval for deductions under Section 80GG. Proper understanding of eligibility, accurate calculation, timely submission of Form 10BA, and careful maintenance of documentation are essential steps to claim this deduction without issues.
How TaxBuddy Simplifies Section 80GG Filing
TaxBuddy streamlines the Section 80GG filing process by automatically calculating the eligible deduction based on the rent paid and total income. The platform also helps generate and submit Form 10BA digitally while ensuring that all required documents are properly uploaded. With TaxBuddy, taxpayers can avoid manual errors, maximise their deductions, and file returns efficiently without delays.
Conclusion
Section 80GG provides an important tax benefit for those living in rented accommodation without receiving HRA. By following the eligibility conditions, maintaining proper documentation, and using platforms like TaxBuddy, taxpayers can claim the maximum deduction with ease. For anyone looking for assistance in tax filing, it is highly recommended to download the TaxBuddy mobile app for a simplified, secure, and hassle-free experience.
FAQs
Q1: Can salaried individuals claim Section 80GG if they receive partial HRA?
No, salaried individuals cannot claim Section 80GG if they receive any part of House Rent Allowance (HRA) from their employer. The deduction under Section 80GG is specifically meant for those who do not receive HRA and pay rent for accommodation. Even a partial HRA received disqualifies the taxpayer from claiming this deduction.
Q2: Is Section 80GG allowed in the new tax regime?
No, Section 80GG is not available under the new tax regime. This deduction is only applicable under the old tax regime, which allows taxpayers to claim various exemptions and deductions to reduce taxable income. Taxpayers under the new regime benefit from lower slab rates but cannot claim 80GG.
Q3: What documents are required to claim Section 80GG?
To claim Section 80GG, a taxpayer must maintain the following documents:
Rent receipts for the months for which the deduction is claimed.
Rental agreement with the landlord, if applicable.
Form 10BA declaration stating that the taxpayer does not receive HRA and does not own a house in the city of employment or residence.
Q4: How is the Section 80GG deduction calculated?
The Section 80GG deduction is the least of the following three amounts:
Rent paid minus 10% of total income.
₹5,000 per month (₹60,000 per year).
25% of total income. Taxpayers must calculate all three and claim the minimum value as the deduction in their ITR.
Q5: Can self-employed individuals claim Section 80GG?
Yes, self-employed individuals are eligible to claim Section 80GG if they meet all conditions: they must pay rent for accommodation, not receive HRA, and submit Form 10BA. This makes the deduction accessible to professionals running their own businesses or freelancers.
Q6: What is Form 10BA?
Form 10BA is a declaration required under Section 80GG. It confirms that:
The taxpayer does not receive HRA.
The taxpayer has paid rent for the residential accommodation.
The taxpayer does not own a residential property in the city where they work or reside. It is mandatory to submit this form to claim the deduction.
Q7: Can Section 80GG be claimed for multiple rented properties?
No, Section 80GG can only be claimed for the residential property actually occupied by the taxpayer. Deductions cannot be split across multiple rented houses, even if rent is paid for more than one property.
Q8: What happens if I claim Section 80GG incorrectly?
Incorrect claims may trigger scrutiny by the Income Tax Department. Consequences include:
Rejection of the deduction.
Penalties or interest for misreporting.
Delay in processing refunds. Accurate documentation and proper calculation are essential to avoid these issues.
Q9: Can TaxBuddy help in filing Section 80GG?
Yes, TaxBuddy simplifies Section 80GG claims by:
Automatically calculating eligible deduction.
Providing digital submission of Form 10BA.
Ensuring rent receipts and supporting documents are properly accounted for. This reduces errors and speeds up the filing process for salaried and self-employed taxpayers alike.
Q10: Is there a maximum limit for Section 80GG deduction?
Yes, the maximum allowable deduction under Section 80GG is ₹5,000 per month, or ₹60,000 per year. Even if actual rent paid is higher, this cap applies. Taxpayers must also consider the other two calculation conditions to determine the final deductible amount.
Q11: Can minors or dependents claim Section 80GG?
No, only the individual taxpayer who pays rent and meets eligibility conditions can claim Section 80GG. Minors, dependents, or family members cannot claim this deduction on their behalf.
Q12: How can errors be avoided while claiming Section 80GG?
To avoid mistakes while claiming Section 80GG:
Keep accurate rent receipts.
Ensure no HRA is received from the employer.
Submit Form 10BA correctly.
Use automated platforms like TaxBuddy, which guide through calculations and documentation, minimizing errors and ensuring smooth filing.
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